Horace interviews Maxwell Wessel, fellow at Clay Christensen’s Forum for Growth and Innovation at Harvard Business School. We explore the notion of apps as a disruption for multiple industries, especially entertainment.

comScore reports that US smartphone penetration has decisively crossed over 50% in August. This should not come as a surprise as the penetration rate has been very linear.

Now that we’ve crossed this milestone, the thing to watch is the conversion rate from smartphone non-consumption to smartphone consumption.

The reason is that we don’t know what “saturation” means in smartphones. We can assume it’s at least 80% as about 80% of new phones being purchased are smartphones. What we don’t know is how much above 80% it can be. It could be 100% if feature phones simply stop being made but we can’t be sure if there will be latent demand and how long this will last (similar to the market for black-and-white TVs after Color became commonplace).

To help keep an eye on this measure, the following graph shows the rate at which non-smart to smart conversion is happening.

It measures the addition of new (to smart) subs each week in a particular measurement period (three months ending the month shown on the x-axis). There is also a 3 period moving average shown as a line. Keep in mind that this shows net new users and therefore excludes smartphone switchers. It’s a good measure of how rapidly non-consumers are being converted to consumers.

The data shows that there are as many first time smartphone adoptions in late 2012 as there were in late 2010. Or, the new-to-smart users are joining ecosystems just as quickly when penetration is 50% as when it was 20%. An encouraging situation when considering the opportunity space above 50%. The “S-curve” has not reached an inflection point.

If you’re thinking about growth, so far so good. There is however one surprise in the data.